Capital gains: Taxed as ordinary income.
What changed: Flat rate cut from 4.25% to 3.99% on Jan. 1, 2026 (final scheduled step).
| January 1, 2026 | North Carolina income tax rate reaches 3.99% The flat rate fell from 4.25% to 3.99%, the final scheduled step. It saves about $2,600 a year per $1 million of income. | In effect |
California's combined top marginal rate reaches 14.4% and NYC residents face up to 14.776%, even as Georgia, Indiana, Kentucky and six other states cut income tax rates on January 1.
Eight states cut individual income tax rates for 2026 while New York extends its temporary surtaxes on high earners, reshaping the state bill for affluent households and anyone weighing a move.